Book Margin Safety Pdf
Investors are all too often lured by the prospect of instant millions and fall prey to the many fads of Wall Street. The myriad approaches they adopt offer little or no real prospect for long-term success and invariably run the risk of considerable economic loss - they resemble speculation or outright gambling, not a coherent investment program.
For those who do not have the $1000 for the book, check this out. There is a scanned.pdf of it online. Just go here and download it as a “free user”. I still cannot believe this is out of print.inexplicable. Margin of safety pdf DownloadMargin of safety pdf. Free Download e-Books Kazuo Tanaka, Hua Wang - Fuzzy Control Systems Design and Analysis A Linear Matrix.
But value investing - the s Investors are all too often lured by the prospect of instant millions and fall prey to the many fads of Wall Street. The myriad approaches they adopt offer little or no real prospect for long-term success and invariably run the risk of considerable economic loss - they resemble speculation or outright gambling, not a coherent investment program. But value investing - the strategy of investing in securities trading at an appreciable discount from underlying value - has a long history - has a long history of delivering excellent investment results with limited downside risk. Taking its title from Benjamin Graham's often-repeated admonition to invest always with a margin of safety, Klarman's 'Margin of Safety' explains the philosophy of value investing, and perhaps more importantly, the logic behind it, demonstrating why it succeeds while other approaches fail. The blueprint that Klarman offers, if carefully followed, offers the investor the strong possibility of investment success with limited risk. 'Margin of Safety' shows you not just how to invest but how to think deeply about investing - to understand the rationale behind the rules to appreciate why they work when they work, and why they don't when they don't.
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Top 5 Quotes / Thoughts: 1. Page 5: “You don’t understand. These are not eating sardines, they are trading sardines” [Difference between investment (buying stream of cashflows) and speculation (return solely dependent on re-sale).] 2. Page 81: “Buffet’s first and second rules of investing: 1) don’t lose money; and 2) never forget the first rule” [Don’t expose yourself to appreciable loss of principal.
Make sure that your downside is bounded (Taleb).] a. Compound interest is the 8th wonder of the w Top 5 Quotes / Thoughts: 1. Page 5: “You don’t understand.
These are not eating sardines, they are trading sardines” [Difference between investment (buying stream of cashflows) and speculation (return solely dependent on re-sale).] 2. Page 81: “Buffet’s first and second rules of investing: 1) don’t lose money; and 2) never forget the first rule” [Don’t expose yourself to appreciable loss of principal. Make sure that your downside is bounded (Taleb).] a.
Compound interest is the 8th wonder of the world – mathematically better to earn 16% p.a. For 10-years than to earn 20% p.a.
For 9-years and then lose 15% in year-10. You may ‘lose’ for 9-years out of 10, but in the long-term you will streak ahead) 3. Page 84: “The future is uncertain Investors must be willing to forego some near-term return, if necessary, as an insurance premium against unexpected and unpredictable adversity” a. Page 119: “avoid confusing precise forecasts with correct forecasts” (disdain false precision – Thorndike) b. Page 218: “there is only one valid rule for selling: all investments are for sale at the right price” (similar to Outsiders) 4. Page 112: “risk is the perception of the probability of loss and the potential magnitude of loss” (no investment itself is inherently risk, risk is a function of price) a. Page 110: “Low risk-high-return opportunities exist” (Three causes: 1) asymmetry of information; 2) difficult to analyse; 3) vendor or purchaser acting for reasons unrelated to value) 5.
Page 143: “numbers are not an end in themselves. Rather they are a means to understanding what is really happening in a company” [the numbers don’t drive the people, people drive the drivers (Killian Hurley). Think more, calculate less.
Numbers are meaningless outside their context, or without anything to compare them against] a. Page 158: “most investors strive fruitlessly for certainty and precision yet high uncertainty is frequently accompanied by low prices.”, also, “the value of in-depth fundamental analysis is subject to diminishing marginal returns” (the 80/20 rule).
Margin Of Safety
[We’d rather be roughly right than precisely wrong – Buffet. Don’t exclude factors simply because they are difficult to measure]. Anyone interested in taking a hands-on approach to their portfolios would benefit from Klarman's guidance in Margin of Safety. The author likens Wall Street to a casino full of speculators with odds stacked in their favor, and against the individual investor that tries to compete on uneven ground. The opening line is a quote by Mark Twain: 'There are two times in a man's life when he should not speculate--when he can't afford to and when he can.' Klarman implores the reader to implement and foll Anyone interested in taking a hands-on approach to their portfolios would benefit from Klarman's guidance in Margin of Safety.
The author likens Wall Street to a casino full of speculators with odds stacked in their favor, and against the individual investor that tries to compete on uneven ground. The opening line is a quote by Mark Twain: 'There are two times in a man's life when he should not speculate--when he can't afford to and when he can.' Klarman implores the reader to implement and follow a process (several of which are outlined in the book) instead of bouncing among speculative strategies that are better left to institutions, or preferably no one at all. The book's common sense can be summed as do the homework necessary to know a stock's value, assume you're wrong and haircut that value, then wait for the market to offer the haircut price. Other approaches are unsustainable. He discusses past market environments that provided great opportunity for value investors to show that they do occur and this strategy does work. My one criticism is against Klarman's sharp criticism of index funds, as I believe they are a reasonable cost-effective choice for many hands-off investors.
However, the pros in this book far outweigh the cons, making Margin of Safety a good read for current and aspiring investors. I read this book after reading 'Fooled by Randomness', and that had left me wondering whether trading/investing is really purely random or can there really be method to the madness. Much to my delight, Seth Klarman does provide a sound method to achieve investment success that is based on business fundamentals than pernicious speculation, relying on the 'wisdom' of the market.
The book is a fascinating read, especially for someone with a non-finance background but fresh out of a B-School, where I read this book after reading 'Fooled by Randomness', and that had left me wondering whether trading/investing is really purely random or can there really be method to the madness. Much to my delight, Seth Klarman does provide a sound method to achieve investment success that is based on business fundamentals than pernicious speculation, relying on the 'wisdom' of the market. The book is a fascinating read, especially for someone with a non-finance background but fresh out of a B-School, where basic theoretical knowledge is covered but not how to actually go about investing in the real world whilst being risk-averse. I hope to read Benjamin Graham's - The Intelligent Investor too, from which the book draws heavily the Value Investing methodology. The two are a must read for people who want to build a career in investing.